Deanne de Leeuw
Bakers Delight Holdings Ltd sell franchises, not bread. This is a very important point to remember.
I bought into the dream that was Bakers Delight. What I found was a corporate culture of bullying and intimidation, misrepresentations, questionable accounting practices and flagrant breaching of confidentiality.
I set up my first bakery in Vincentia, in December 2001. I was immensely proud of my Vincentia store. I worked hard to achieve a turnover of $730,000.00 p.a. in my first full year of trading; in my small town with a population of 5,000 people. I set up systems, trained my staff and worked hard in the local community to gain their support. Life, and business, was good.
In early 2003 a Bakers Delight representative suggested that I purchase the Kiama and Shellharbour stores. They were being sold as a ‘package’. Whilst the Kiama store was profitable, the Shellharbour store was not. Bakers Delight offered me substantial support and marketing assistance in order to convince me to purchase the Shellharbour store. My Business Consultant promised to work closely with me to turn the store around and get it to its full potential.
On takeover of the Kiama store in August 2003, I uncovered a major staff under-payment issue. I asked Bakers Delight for their assistance. They told me that it would not be in my interests to become involved. A Bakers Delight representative informally told me that it was a nationwide issue and I would create problems for myself if I pursued the matter.
Around the same time as I took over the Kiama store I also began questioning Bakers Delight’s accounting practices. I have repeatedly requested a full reconciliation, including tax invoices, for the set-up of my Vincentia bakery. To this day, I have still not been provided with this information. It should not be an issue to gain full and accountable proof of how and where the $410,000+ that I paid to Bakers Delight to set-up that store was spent. An excel spreadsheet with no substantiation is not sufficient. I have found this non-provision of financial proof to be a common theme with other franchisees that have also set up and/or refurbished stores.
I believe that raising these two issues was the turning point in my relationship with Bakers Delight.
On the 25 June 2004, I requested a meeting with the Operations Manager to request her assistance with a number of issues including that of the failing Shellharbour store. Her response to my requests for help was breach notices for all three of my stores. These breaches were fabricated. Bakers Delight then withdrew all support and forbade their representatives from making contact with me even though I was still required to pay royalty and advertising.
In November 2004, my Business Consultant told me that Bakers Delight were going to bankrupt me. I did not believe him. On the 29 November 2004 I was issued breach notices by email for all three of my stores, with 7 days to rectify. I retained legal representation and issued Notice of Disputes regarding these breaches. My Notice of Disputes were ignored with my lawyer receiving an email from Bakers Delight stating that they would be moving to termination immediately. I was called to a meeting with Bakers Delight on 13 December 2004 where I was told there would be no mediation. I was given the ‘option’ of letting Bakers Delight sell my stores; if I didn’t agree, I would be terminated immediately.
I received the Termination notices for my three bakeries on Christmas Eve 2004.
The Termination Notices gave me until 28 February 2005 to sell my 3 bakeries, although Bakers Delight would control the sales process. Bakers Delight did not advertise my bakeries for sale until the middle of January 2005, and then only after I sent emails to them asking why they had not been advertised. They controlled every aspect of the sale, including the approval of any potential purchasers. In the case of the Shellharbour bakery, Bakers Delight terminated the lease without my knowledge. I only found this out when Lenards Chicken shopfitters went into the bakery and informed my staff that they would be starting construction as soon as we were gone. All my staff immediately gave their notice. I could not blame them; it was a cruel way for them to discover that they didn’t have a job at the end of the month. With no staff, I could not open the store and so the Shellharbour Franchise Agreement was terminated for ‘abandonment’. The store never re-opened. Bakers Delight kept all of my equipment - 2½ years later I still have not been paid for it.
On 28 February 2005 Bakers Delight locked me out of my Vincentia and Kiama bakeries. This is how I learnt that although you own the assets of your business, you do not control them - Bakers Delight do and they can just take them.
Bakers Delight also kept all of my stock. I still have not received the money for that either.
The Vincentia and Kiama stores continued trading under some form of lease arrangement with the people who eventually bought them. During this time I received “the written down value” for the Vincentia and Kiama bakeries. I received approximately $190,000.00 for three bakeries that have been independently valued at 2 Million dollars.
It is my belief that if I had not engaged legal representation this would have been all that I would have received. My companies would have been liquidated and the churn would have been successfully completed when the bakeries were on-sold.
Four months after I was terminated, Bakers Delight did on-sell my Vincentia and Kiama bakeries. I was totally excluded from this process. I believe that because I was threatening legal action Bakers Delight paid me approximately $600,000.00. This suggests to me that Bakers Delight either dramatically undersold my bakeries or they kept the balance. I will use the legal process to find out the truth.
Not only have I lost my three bakeries, independently valued at $2 Million dollars, I have also lost my family home and investment properties. I still have business debts of about $1.4 Million which is growing every month due to interest and charges. If I had received the fair market value for my bakeries the business debts would have been cleared and I would not have lost any of my assets. Two and a half years later I have to rely on the court process just to find out what Bakers Delight has done with my money. I will continue to pursue Bakers Delight to get back what I have lost due to their conduct. The details of their conduct will also come out in the court process.
Bakers Delight has issued media releases regarding my “outrageous” allegations, strenuously denying them. Time will tell. If Bakers Delight truly believes that they have no case to answer, then they should stop the delaying tactics of challenging the jurisdiction of the IRC. Meet me in court and let the facts of the case be heard.
I believe Bakers Delight focus on churning a percentage of their franchisees to achieve maximum profit, believing that as long as they keep the percentage low, and the outgoing franchisees silenced, they will not get caught.
I did start legal action in the Industrial Relations Court (NSW). I did make the complaints to the ACCC. I did go to my Federal Member of Parliament, Mrs Joanna Gash MP, and ask for her help in getting my complaint heard. Because of Joanna Gash’s support I am not fighting alone anymore. It seems like every other day, another Bakers Delight franchisee, both former and current, make contact with me.
Bakers Delight’s conduct can not be allowed to continue. The ACCC are investigating. Politicians from both sides of the house and from all over Australia are receiving stories like mine from their constituents that are both former and current Bakers Delight franchisees. The media is taking an active interest. All will be revealed.